Feeds

Google India slapped with £8.7 MILLION tax penalty

Search giant accused of misleading tax office

High performance access to file storage

Google is facing more embarrassing revelations about its tax dealings after its Indian business was accused of misleading the government, violating accounting rules and slapped with a Rs76 crore (£8.7m) fine.

The penalty order, which Google is appealing, relates to the tax year 2008-9 and if upheld will ensure the search giant pays tax on all of its Indian advertising revenues in India.

The tax office said Google India credited Rs119.83 crore (£13.7m) to Google Ireland for distribution fees without deducting tax at source according to the tax treaty between the two countries, Economic Times reported.

The penalty order, seen by the ET, states the following:

The entire activity of (Google's) AdWords Programme and the revenue earned thereon has happened in India with both the advertisers as well people making use of the advertisements situated in India. To this extent, the income of M/s Google Ireland Ltd was held to be accrued as well as arisen in India itself.

The situation is complicated further as many regional Google businesses route their earnings via the Netherlands to an entity in the tax haven of Bermuda – an entity which is actually a subsidiary of Google Ireland, according to ET.

The tax office has now apparently recalculated Google’s profits to take account of the “excessive and unreasonable” distribution fees to Google Ireland. It also slammed the search giant for breaking local accounting laws by declaring "revenues on a net basis instead of showing it on a gross basis".

India appears to be taking a more robust approach to The Chocolate Factory’s tax avoidance than is happening in the UK, although Amazon, Google and Starbucks all got a grilling by MPs at the Public Accounts Committee this week.

Google was singled out for being “immoral” in its funnelling of funds out of the UK. Despite generating £2.5bn in UK sales in 2011 it paid tax of just £3.4m.

Things could get tougher in the UK too, with the chancellor rumoured to be announcing new tax avoidance plans in the autumn budget. ®

Top three mobile application threats

More from The Register

next story
Dropbox defends fantastically badly timed Condoleezza Rice appointment
'Nothing is going to change with Dr. Rice's appointment,' file sharer promises
Audio fans, prepare yourself for the Second Coming ... of Blu-ray
High Fidelity Pure Audio – is this what your ears have been waiting for?
Record labels sue Pandora over vintage song royalties
Companies want payout on recordings made before 1972
MtGox chief Karpelès refuses to come to US for g-men's grilling
Bitcoin baron says he needs another lawyer for FinCEN chat
Number crunching suggests Yahoo! US is worth less than nothing
China and Japan holdings worth more than entire company
Zucker punched: Google gobbles Facebook-wooed Titan Aerospace
Up, up and away in my beautiful balloon flying broadband-bot
Apple DOMINATES the Valley, rakes in more profit than Google, HP, Intel, Cisco COMBINED
Cook & Co. also pay more taxes than those four worthies PLUS eBay and Oracle
prev story

Whitepapers

SANS - Survey on application security programs
In this whitepaper learn about the state of application security programs and practices of 488 surveyed respondents, and discover how mature and effective these programs are.
Combat fraud and increase customer satisfaction
Based on their experience using HP ArcSight Enterprise Security Manager for IT security operations, Finansbank moved to HP ArcSight ESM for fraud management.
The benefits of software based PBX
Why you should break free from your proprietary PBX and how to leverage your existing server hardware.
Top three mobile application threats
Learn about three of the top mobile application security threats facing businesses today and recommendations on how to mitigate the risk.
3 Big data security analytics techniques
Applying these Big Data security analytics techniques can help you make your business safer by detecting attacks early, before significant damage is done.